Reinvest. Reinvigorate.

If you’re not going to upgrade your property, you have no chance at upgrading your clientele.

When I went to Reno last month to attend the Gaming Standards Association’s Technology Conference, it had been about five years since I had been to northern Nevada. I had heard much about Reno’s diversified economy, and I wasn’t disappointed. The town is booming with new businesses, attractions and enthusiasm.

I booked a room at Harrah’s Reno, the first time I had stayed there since the 1990s. Unfortunately, Harrah’s was mired in the 1980s. I was disappointed in the public areas, and when I got to my room, I was shocked. It hadn’t changed since my ’90s visit. It had only gotten worse. Ripped wallpaper, holes in the rugs, lights not working, dingy curtains… It was certainly not indicative of the top properties in the Caesars organization. As the first casino opened by the legendary Bill Harrah, I imagined him rolling over in his grave at the thought of what his baby had become.

While there were new slot machines on the casino floor, they rested on worn-out carpet. Some of the chairs at the table games had ripped upholstery. Like all casinos of the era, where you didn’t want the players to know the time of day, it was dark and unwelcoming.

But to be honest, Harrah’s Reno isn’t the only dated casino hotel I’ve visited in the past few years. And Caesars Entertainment isn’t the only company (or tribal gaming enterprise, for that matter) that lacks a certain reinvestment in particular properties. We all know the major casino companies emphasize some properties over others; some properties are considered their flagships, the others just are along for the ride.

Why reinvest in rooms when your average daily rate or occupancy rate is unlikely to increase? Until a couple of years ago, Reno hadn’t been a destination of any sort, so it didn’t make sense.

And we all know that there are different levels of clientele at different casinos, even within the same company. If you’re going to cater to mainly low rollers, why spend the money to upgrade the property when it’s not likely you’ll change the clientele?

Thinking like this only contributes to a vicious cycle of lowered expectations and even lower results. If you’re not going to upgrade your property, you have no chance at upgrading your clientele.

Let’s look at what Station Casinos has done in Las Vegas recently. A few years ago, Station bought the Palms casino in Las Vegas, an off-Strip casino that had experienced a decline since it was owned and operated by the Maloof brothers. Station bought the property for a reasonable price, a little over $300 million. They could have simply maintained the property at its current level or added a few incremental attractions, and made about the same amount of money or a little more than previous owners had.

Instead, Station invested more than $450 million in the Palms and created a showplace off-Strip property that is just as nice as the company flagship, Red Rock in the Summerlin area of Vegas. While the jury is still out, the Palms can now approach a better level of player and charge a higher ADR for its renovated rooms.

But what really impressed me was the company’s $192 million reinvestment in its original casino, Palace Station. Just a mile or so away from the Palms, Palace Station was somewhat dingy and worn out, even with a few upgrades over the years. Now, with totally renovated rooms, upgraded restaurants, a new sports book and more, Palace Station has been brought into the 21st century. And hopefully, the return will justify that investment.

So rather than getting caught in that vicious cycle of low expectations and little capital reinvestment and the same low-earning customers, casino corporations can plan to succeed by keeping even their lowest-level properties up to date.

Now, immediately after my Harrah’s Reno experience, I stayed at Harvey’s in Lake Tahoe, where I had the honor of helping to open this year’s iconic Executive Development Program. Harvey’s is almost as old as Harrah’s Reno, but the rooms were modern, clean and well-maintained. Same company owns it, but manages to find the money to reinvest in a property that undoubtedly has a higher profile and a clientele that spends more. What would happen if you apply this same plan to Harrah’s Reno? Let’s find out!

Roger Gros is publisher of Global Gaming Business, the industry's leading gaming trade publication, and all its related publications. Prior to joining Global Gaming Business, Gros was president of Inlet Communications, an independent consulting firm. He was vice president of Casino Journal Publishing Group from 1984-2000, and held virtually every editorial title during his tenure. Gros was editor of Casino Journal, the National Gaming Summary and the Atlantic City Insider, and was the founding editor of Casino Player magazine. He was a co-founder of the American Gaming Summit and the Southern Gaming Summit conferences and trade shows. He is the author of the best-selling book, How to Win at Casino Gambling (Carlton Books, 1995), now in its fourth edition. Gros was named "Businessman of the Year" for 1998 by the Greater Atlantic City Chamber of Commerce, and received the Lifetime Achievement Award from the American Gaming Association in 2012.
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